Forexpros – Gold futures were lower during European morning trade on Tuesday, as concerns over political uncertainty in Greece and France boosted the U.S. dollar, but indications of strong physical demand in China and India limited losses.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,632.45 a troy ounce during early European trade, shedding 0.4%.
It earlier fell by as much as 0.55% to trade at a two-day low of USD1,630.55 a troy ounce.
Gold futures were likely to find short-term support at USD1,625.55 a troy ounce, the low from April 25 and resistance at USD1,672.15, the high from May 1.
Investors remained jittery after weekend election results in Greece and France raised doubts over Europe’s ability implement austerity measures deemed necessary to tackle the debt crisis in the region.
Efforts to patch together a coalition government in Greece so far have failed, fuelling fears that the debt-strapped country may not have a government in place in time to secure its next tranche of international aid next month.
The euro traded close to Monday’s three-month low against the U.S. dollar, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.23% to trade at 79.88.
Although gold’s appeal as a safe haven is boosted during times of economic uncertainty, the euro zone’s debt crisis has done little to bolster appetite for the precious metal. A weakening euro and stronger dollar have weighed on gold instead.
Losses were limited after official data showed that China’s gold imports from Hong Kong surged more than six-fold in the first quarter to 135,529 kilograms Shipments in March rose 59% from February, the data showed.
Meanwhile, India’s Finance Minister Pranab Mukherjee said Monday that the country will withdraw an excise duty on all jewellery, boosting prospects for the country’s gold demand this year.
Prithviraj Kothari, president of the Bombay Bullion Association said that gold imports to India could rise in the near-term on pent-up demand from jewelers.
India and China are the world’s two-largest gold consumers.
Prices found further support amid indications of strong demand in the U.S. as well, after data from the U.S. Mint showed sales of American Eagle gold coins have already reached 20,000 ounces so far in May, the same amount in volume terms as was sold in the whole of April.
Elsewhere on the Comex, silver for July delivery retreated 1.25% to trade close to a four-month low of USD29.75 a troy ounce, while copper for July delivery dropped 1.35% to trade at USD3.722 a pound.
Forexpros
